Congressman Garamendi Joins House Democratic Caucus in Rejecting Reckless Bush Tax Cuts for Rich Millionaires and Billionaires
WASHINGTON, DC – Congressman John Garamendi (D-Walnut Creek, CA) today joined an overwhelming majority of his House Democratic colleagues in issuing a resolution rejecting a proposed two year extension of the Bush tax cuts for rich millionaires and billionaires and estate tax giveaways of $10 Billion for just 3,600 estates. The tax cuts cost Americans close to $90 billion a year, and Garamendi believes that money would be better spent investing in education, research, infrastructure, job skills training, extending the payroll tax holiday, or paying down the deficit.
Congressman Garamendi said, "It's time to go back to the negotiating table and put together a compromise that serves the working families, not the super wealthy."
Garamendi added, "I joined my House Democratic colleagues in rejecting an extension of the Bush tax cuts for millionaires and billionaires, because I believe our top priorities must be creating jobs and growing the middle class. Economists agree that tax cuts for rich people are ineffective at creating jobs. Let's take the close to $80 billion a year we would spend on the rich and invest that money into education, infrastructure, or other job creators."
Most economists believe the high-end Bush tax cuts are bad public policy. It is ineffective at creating jobs while needlessly and unproductively adding to the deficit:
• According to the non-partisan Congressional Budget Office, extending the Bush tax cuts for all Americans is the least effective, recouping somewhere between 10 and 40 cents for every dollar invested. According to Doug Elmendorf, director of the CBO, "(T)he economic impact per dollar of revenue reduction from the full extension would be smaller than that from partial extension because a greater proportion of the tax savings from the full extension would go to relatively high income households, which tend to spend less of an increase in income than lower-income households do."
• According to Nouriel Roubini, one of the few economists who correctly predicted the Great Recession years before it began, a two year reduction in the payroll tax would be much more effective at creating jobs. He argues: "The reduced labor costs would lead employers to hire more; for employees, the increased take-home pay would boost much-needed economic consumption and advance the still-crucial process of deleveraging households (paying down credit card debt and other legacies of the easy-credit years). … President Obama could fully fund the reduction in payroll tax by allowing the Bush tax cuts for people making more than $250,000 a year to expire."
• According to Mark Zandi, chief economist at Moody's Analytics, making the Bush income tax cuts permanent is the least effective form of stimulus available to policymakers, recouping only 32 cents for every dollar borrowed from foreign countries. The most effective strategies for economic recovery include food assistance ($1.74 in economy for every $1 invested), assistance for people out of work through no fault of their own ($1.61 for every $1), infrastructure investments ($1.57 for every $1), and aid to states for education and other vital services ($1.41 for every $1).